Will theatres in Maharashtra finally unlock Indian Cinema's road to recovery?

Delhi allowed Cinema halls to open in July. In the same month, former chief minister of Punjab, Captain Amarinder Singh allowed the Cinemas to open with some riders. In Gujarat they were open, the most populous state in India, Uttar Pradesh allowed theatres to remain open. In the South, Telugu films kept raking in good Box Office numbers. So, what happened at the weekend that stock prices of film chains suddenly started soaring?

Chief Minister of Maharashtra, Uddhav Thackeray announced that the Cinemas can open from October 22 in the state. Immediately after that announcement was made, studios started booking release dates for big-budget films. Close to 23 Hindi films have already announced their release dates. In fact, till mid-2022, all weekends are packed with big releases. That is what has happened!

Theatres in many regions were already open, but studios with Hindi Movies in their possession decided against releasing them. Close to 30 per cent of the theatrical revenue gets collected from Maharashtra. Big markets like Delhi, UP only gets high footfall in theatres when there are big Hindi or English films releasing. With theaters 'locked-down' in Maharashtra, none of the studios were releasing high-profile Hindi movies resulting in lower footfalls across India.

“We whole-heartedly welcome the announcements of release dates made by various Production houses," says Alok Tandon, CEO - INOX Leisure. "Maharashtra holds the key for the revival," reiterates Gautam Dutta, CEO, PVR Limited. "Opening of Maharashtra is specifically significant because 18 per cent of our screen strength lies in Maharashtra, the highest in our circuit and serves as a focal center for the entertainment industry," he adds.

The Maharashtra government is yet to roll out the standard operating procedures that the theatres will have to follow once they reopen. Reports suggest a 50 per cent cap might get imposed to start with. There are rumours that only fully vaccinated patrons can enter the halls. Thackeray announced halls will open after meeting producers, owners of film chains and heads of association. The representatives tabled a report to the chief minister claiming that the industry has lost around Rs 4,800 crore since March 2020. About 441 films were released during the year 2020, as compared to 1,833 releases in 2019. Consequently, the filmed entertainment segment saw an 80 per cent decline across domestic and international theatrical revenues.

One might argue that films were releasing on the video-on-demand streaming platforms and some players were even paying more than Rs 100 crore per title to keep the industry afloat. According to the global consultancy firm - EY, the size of India's Filmed Entertainment industry in 2019 was Rs 19,200 crore. In 2020, it dropped to Rs 7,200 crore. But digital rights primed in 2020 due to high acquisition costs and the emergence of trends like 'Direct to OTT'. EY estimates digital rights grew by 86 per cent in 2020 compared to 2019. Yet, it accounted for Rs 3,540 crores, nowhere close to theatrical revenues the industry raked in 2019.

"There are more than 1,500 movies ready and waiting to release," said Kapil Agarwal, JMD, UFO Moviez, in an interview with CNBC. He opined that the industry was craving for a slate of movies featuring stars. Akshay Kumar starrer cop drama, 'Sooryavanshi' will release on November 4, Superhit franchise 'Bunty Aur Babli's' sequel will hit Cinemas on November 19, 'Satyameva Jayate 2', '83' based on team India's World Cup triumph, Amir Khan's 'Laal Singh Chaddha' among many other titles have announced thier release dates.

"We now have both passion and content on our side to stage a remarkable comeback and entertain film lovers. The emerging content line-up also augurs well for the financial health of the cinema exhibition sector, and should hasten the recovery process," says Alok Tandon. "Once the Hindi films get released, advertisers will also return to the screens" adds Agarwal.

While the excitement is palpable, experts feel there is a need to debate more on how many weeks of exclusivity should be there for the multiplexes to effectively monetise films. Meaning, how long should a film wait before making itself available on any streaming platform. The OTT platforms have already rolled out special offerings to showcase 'first-day first-show.'

"Some movies will continue to release first on OTT. With so many studios already announcing release dates, mid and low budget films will fail to find screens. These movies will instead head to OTT and find its own niche," says an industry expert. Adding, "Movies releasing in theatres first benefit the OTT platforms. They don't need to market the film aggressively to attract eyeballs. If a film has scored more than Rs 100 crore on Box Office, in all likelihood, people will know about it and so, OTT streaming the film later will retain its set of viewers."

Films help OTT platforms acquire new customers, something that might face a blow once big-budget films are released first in the theatres. "We remain positive on PVR, INOX as Maharashtra market has opened up from October 22. Many states have announced 100 per cent occupancy. F&B spends per head are already back to pre-Covid levels. Ad revenues will be last to recover with 2 quarters of lag once movies start. We remain positive on PVR, Inox and Maintain buy on both," says Abneesh Roy, executive VP at Edelweiss Financial Services.

The only risk, he says is a serious third-wave of Covid in terms of fatalities. "Seems a low risk at this juncture given data from UK and other European Countries. Also India vaccinations are breaking new records regularly which is a big confidence booster for consumers," he sums up.